economists & Orthodoxy

Doug Henwood dhenwood at panix.com
Tue Jan 5 13:46:47 PST 1999


[the economic mind at work...]

"Sect, Subsidy and Sacrifice: An Economist's View of

Ultra-Orthodox Jews"

BY: ELI BERMAN

Boston University

National Bureau of Economic Research (NBER)

Document: Available from the SSRN Electronic Paper Collection:

http://papers.ssrn.com/paper.taf?abstract_id=141977

Paper ID: NBER Working Paper No. 6715

Date: September 1998

Contact: ELI BERMAN

Email: Mailto:eli at bu.edu

Postal: Boston University

270 Bay State Rd

Boston, MA 02215 USA

Phone: (617)353-4396

Fax: (617)353-4449

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ABSTRACT:

The Israeli Ultra-Orthodox population doubles each seventeen

years. With 60% of prime-aged males attending Yeshiva rather

than working, that community is rapidly outgrowing its

resources. Why do fathers with families in poverty choose

Yeshiva over work? Draft deferments subsidize Yeshiva

attendance, yet attendance typically continues long after they

are draft exempt. I explain this puzzle with a club good model

in which Yeshiva attendance signals commitment to the community,

which acts as an extremely efficient and generous

mutual-insurance club. Subsidizing membership in a club with

sacrifice as an entry requirement induces increased sacrifice,

compounding the distortion and dissipating the subsidy. Policies

treating members and potential entrants equally are Pareto

improving. The analysis may generalize to radical Islamic sects

and other "fundamentalist" groups. These also practice mutual

insurance and also seem to respond to incursion of markets by

increasing the stringency of prohibitions, which may explain

their high fertility rates.

JEL Classification: H2, I3, J1, J2, N0, O1, Z1



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